August Car Sales End Summer on a Hot Streak

New car sales continued their strong pace in August, with many automakers experiencing their best month in years. General Motors saw a 22-percent increase compared with a year ago, Ford was up 20 percent, Honda sales were up 27 percent and Toyota saw an increase of 23 percent. Ford says it had its “best retail sales month since August 2006,” while Toyota Division Group Vice President and General Manager Bill Fay says, “August capped a great summer for new vehicle sales, and it was Toyota's best month in more than five years.”
The New York Times says that leases are helping drive sales of new vehicles, thanks to low monthly payments and the fact that leases that are available on a wide range of vehicles, including non-luxury models. “Higher residual values, thanks to a robust used car market, and record low interest rates mean lower monthly payments for buyers with good credit,” The Times writes.
In addition to enticing financing rates, The Associated Press says that consumers simply couldn’t wait any longer to buy a car. “More people are working as the economy improves, and they need cars to commute to their jobs,” the AP reports. “The cars on U.S. roads have reached a record 11.4 years old and need to be replaced.”
Not only are consumers more willing to take on a car payment, but they’re paying more for their new car, truck or SUV. Kelley Blue Book reports that the average price for a new vehicle in August was $31,657, which is up 0.7 percent compared with August 2012. Karl Brauer, senior analyst for Kelley Blue Book, says, “Chrysler and Honda continue to strengthen their transaction prices from this time last year with strong redesigns among some of their popular models, including RAM 1500, Jeep Grand Cherokee and Honda Accord. Consumers are spending top dollar for some of the latest and greatest models, while other brands are forced to cut prices in order to move vehicles off dealership lots.”
Forbes adds that all-new or redesigned vehicles are drawing shoppers into dealer showrooms. “… carmakers are turning out some of the most appealing, high-quality, fuel-efficient vehicles ever, like the Chevrolet Impala, Ford Fusion and Toyota Corolla. That may be the best reason of all to buy a new car.”
Although car sales are up and people are paying more for new vehicles, it’s still possible to find a good deal, but it depends on the model. Alec Gutierrez, senior analyst for Kelley Blue Book, suggests shoppers consider older models that haven’t been redesigned in a while. “Forced to discount their aging lineup, Volkswagen has experienced significant drops in transaction prices from this time last year,” Gutierrez says. “Jetta, Passat and Golf are among the most discounted models, and car shoppers are certainly benefitting from the brand's lack of fresh new product.”